Construction Contract - New Mexico

CONSTRUCTION SERVICES AGREEMENT

(New Mexico – Private Project)

DOCUMENT HEADER

This Construction Services Agreement (the “Agreement”) is made and entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and between:

1. [OWNER LEGAL NAME], a [state and form of entity], having a principal place of business at [address] (“Owner”); and
2. [CONTRACTOR LEGAL NAME], a [state and form of entity], having a principal place of business at [address] (“Contractor”).

Owner and Contractor are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

Recitals

A. Owner desires to engage Contractor to perform certain construction services in connection with the project described herein.
B. Contractor represents that it is duly licensed in the State of New Mexico to perform the Work (as defined below) and possesses the necessary expertise, personnel, and resources.
C. In consideration of the mutual covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

TABLE OF CONTENTS

1. Definitions
2. Scope of Work and Contract Documents
3. Contract Time; Scheduling; Delays
4. Price, Payment, Retainage, and Lien Compliance
5. Permits; Taxes; Safety
6. Changes in the Work
7. Representations and Warranties
8. Insurance and Bonds
9. Indemnification; Limitation of Liability
10. Default; Suspension; Termination
11. Dispute Resolution
12. General Provisions
13. Execution

1. DEFINITIONS

The following terms shall have the meanings set forth below. Capitalized terms used but not defined in a given Section shall have the meanings assigned in this Section 1.

“Applicable Law” means all federal, state, and local statutes, regulations, ordinances, and codes applicable to the Work, including the New Mexico mechanics lien provisions in NMSA 1978 §§ 48-2-2.1 and 48-2-6.

“Change Order” has the meaning set forth in Section 6.2.

“Claim” means any demand, cause of action, lien, loss, damage, cost, expense, or liability of any kind.

“Contract Documents” means (i) this Agreement, (ii) the Exhibits listed in Section 2.2, (iii) properly issued Change Orders, and (iv) field directives or written interpretations issued pursuant to this Agreement.

“Contract Price” means the not-to-exceed price of $[AMOUNT], subject to adjustment only as permitted under Section 6.

“Contract Time” has the meaning set forth in Section 3.1.

“Draw Schedule” means the progress payment schedule agreed upon by the Parties and attached as Exhibit B.

“Force Majeure Event” has the meaning set forth in Section 3.4.

“Lien Notice” has the meaning set forth in Section 4.6.

“Payment Bond” has the meaning set forth in Section 8.2.

“Project” means the construction, installation, and completion of [PROJECT DESCRIPTION AND LOCATION].

“Retainage” has the meaning set forth in Section 4.3.

“Site” means the real property on which the Project is located, more particularly described in Exhibit A.

“Subcontractor” means any person or entity, of any tier, retained by Contractor to furnish labor, materials, or equipment in connection with the Work.

“Work” means all labor, materials, services, equipment, and other obligations to be performed or furnished by Contractor under the Contract Documents.

2. SCOPE OF WORK AND CONTRACT DOCUMENTS

2.1 Work. Contractor shall diligently perform and complete the Work in strict accordance with the Contract Documents, using its best skill and attention.

2.2 Contract Documents. The following documents are incorporated by reference:
(a) Exhibit A – Legal Description of Site
(b) Exhibit B – Draw Schedule
(c) Exhibit C – Plans and Specifications dated [date]
(d) Exhibit D – Insurance Certificate(s)
(e) Exhibit E – Payment Bond Form
(f) Exhibit F – Schedule of Values
(g) Exhibit G – Project Schedule

2.3 Priority. In the event of a conflict among the Contract Documents, the order of precedence shall be: (1) a fully executed Change Order; (2) this Agreement; (3) the remaining Exhibits, in the order listed above; provided, however, that more stringent requirements and higher standards shall govern.

3. CONTRACT TIME; SCHEDULING; DELAYS

3.1 Contract Time. Contractor shall commence the Work within [number] days after the Effective Date (the “Commencement Date”) and achieve Substantial Completion no later than [DATE] (the “Substantial Completion Date”), and Final Completion no later than [DATE] (collectively, the “Contract Time”), subject to adjustments approved in accordance with Section 6.

3.2 Schedule. Contractor shall submit and maintain an updated critical‐path Project Schedule (Exhibit G). Failure to meet interim milestone dates without approved extension constitutes a Contractor event of default.

3.3 Liquidated Damages. If Contractor fails to achieve Substantial Completion by the Substantial Completion Date, Contractor shall pay Owner agreed liquidated damages of $[AMOUNT] per calendar day, to the extent enforceable under applicable law.

3.4 Force Majeure. Neither Party shall be liable for delay caused by acts of God, war, terrorism, epidemic, governmental order, or other events beyond its reasonable control (“Force Majeure Event”); provided that the affected Party gives written notice within three (3) days after occurrence.

4. PRICE, PAYMENT, RETAINAGE, AND LIEN COMPLIANCE

4.1 Contract Price. Owner shall pay Contractor the Contract Price in accordance with this Article 4.

4.2 Progress Payments.
(a) On or before the [day] of each month, Contractor shall submit to Owner an Application for Payment covering Work completed through the prior month-end, verified by on-Site inspection.
(b) For a project covered by the New Mexico Prompt Payment Act, Owner shall pay each undisputed amount within twenty-one (21) days after receiving the request for payment. If an invoice is improperly completed, Owner shall identify the defect within seven (7) days after receipt. Construction contracts for residential property containing four or fewer dwelling units are excluded from that Act; for an excluded project, insert the negotiated lawful payment period here: [____] days.
(c) Each Application shall be accompanied by: (i) sworn statements and conditional lien waivers from Contractor and its Subcontractors for the prior pay period; (ii) an updated Project Schedule; and (iii) such other documentation reasonably requested by Owner.
(d) On a covered project, Contractor and each Subcontractor shall pay amounts owed to lower tiers for Work performed within seven (7) days after receiving the corresponding payment.

4.3 Retainage. For a project covered by the Prompt Payment Act, Owner shall not retain, withhold, hold back, or otherwise fail to pay amounts owed for Work performed. If the Project is residential property containing four or fewer dwelling units and therefore excluded by NMSA 1978, § 57-28-3, any retainage must be separately negotiated and reviewed for current law: [____% / none].

4.4 Final Payment. On a project covered by the Prompt Payment Act, amounts remaining due shall be paid ten (10) days after certification of completion upon presentation of (i) a properly executed release and duly certified voucher for payment, (ii) any required release of claims and lien claims, except claims reserved in stated amounts, and (iii) proof of completion. Contractor shall also deliver certificates of occupancy (or equivalent), warranties, as-builts, O&M manuals, and other agreed close-out deliverables; those additional items do not extend the Act's payment deadline.

4.5 Payment Disputes. Owner may dispute amounts supported by defective Work, third-party claims, lien exposure, or another good-faith contractual basis, and shall timely pay undisputed amounts owed for Work performed. On a project covered by the Prompt Payment Act, late undisputed amounts accrue interest beginning on the twenty-second day after payment was due at one and one-half percent (1.5%) per month or fraction of a month until payment is issued.

4.6 Lien Notice Requirements.
(a) No generic fifteen-day post-contract “Notice of Contract” is required by the cited New Mexico Mechanics’ Lien Act provisions.
(b) To preserve the full lien claim, a claimant subject to NMSA 1978, § 48-2-2.1 must give the owner or reputed owner, or the original contractor, written notice of the right to claim a lien not more than sixty (60) days after initially furnishing work or materials. The requirement applies only to claims over $5,000 and does not apply to an original contractor, a claimant contracting directly with the original contractor, or a lien on residential property containing four or fewer dwelling units. A later notice may preserve only Work performed or materials furnished on or after the date thirty (30) days before notice.
(c) A lien claim under § 48-2-6 must be verified and recorded within the claimant-specific period: an original contractor has 120 days after completion of the contract; other claimants generally have 90 days after completion of the building, improvement, alteration, or repair. A filed copy must be sent or delivered to the owner or reputed owner within fifteen (15) days after filing.
(d) Contractor shall include in every subcontract a requirement that the Subcontractor timely provide any notice and filing required for that claimant's role and claim.
(e) Failure by Contractor or its Subcontractors to comply with lien procedures shall not relieve Contractor of its obligations under this Agreement and shall be deemed a Contractor event of default.

5. PERMITS; TAXES; SAFETY

5.1 Permits & Licenses. Contractor shall obtain and pay for all permits, licenses, inspections, and governmental fees.

5.2 Taxes. Contractor is responsible for all federal, state, and local taxes related to the Work, except sales tax exemptions expressly provided by Owner.

5.3 Safety. Contractor shall comply with workplace safety laws applicable to the Work and all Site-specific safety rules and shall be responsible for protection of persons and property within its control.

6. CHANGES IN THE WORK

6.1 Owner-Initiated Changes. Owner may, by written directive, order changes in the Work. Any adjustment to the Contract Price or Contract Time shall be set forth in a mutually executed Change Order.

6.2 Change Order Procedure. Within five (5) days of a change directive, Contractor shall submit a written proposal, including itemized cost and schedule impact. Failure to comply constitutes a waiver of adjustment.

6.3 Emergencies. In emergencies threatening immediate harm, Contractor may act without prior approval, but shall notify Owner within twenty-four (24) hours, after which a Change Order shall be processed as set forth above.

7. REPRESENTATIONS AND WARRANTIES

7.1 Contractor’s Representations. Contractor represents and warrants that:
(a) it holds all required licenses and is in good standing under the laws of New Mexico;
(b) the Work will conform strictly to the Contract Documents and will be free from defects in materials and workmanship for a warranty period of [one (1) year] from Final Completion (or such longer period as stated in the Contract Documents);
(c) materials and equipment furnished will be new, of good quality, and free of liens; and
(d) it has not relied on any representations of Owner except as expressly set forth herein.

7.2 Survival. The representations and warranties in this Article 7 survive Final Payment and termination of this Agreement.

8. INSURANCE AND BONDS

8.1 Insurance. Contractor shall maintain, at its sole expense and for the duration of the Work, insurance in at least the following amounts:
(a) Commercial General Liability: $[1,000,000] per occurrence / $[2,000,000] aggregate
(b) Automobile Liability: $[1,000,000] combined single limit
(c) Workers’ Compensation: statutory limits; Employers’ Liability $[1,000,000]
(d) Builder’s Risk / Installation Floater: full replacement cost of the Work
(e) Professional Liability (if design services): $[1,000,000] per claim

Owner shall be named as an additional insured under applicable liability policies only to the extent permitted by NMSA 1978 § 56-7-1; this requirement does not provide coverage for liability caused by Owner's own acts or omissions. Policies shall be primary and non-contributory to the extent permitted by law.

8.2 Payment Bond. If the Parties elect a payment bond for this private Project, Contractor shall furnish Owner within ten (10) days after the Effective Date a bond in the penal sum of [____%] of the Contract Price (the “Payment Bond”) issued by a surety acceptable to Owner. The agreed bond form is attached as Exhibit E. If no bond is required, mark this Section and Exhibit E "Not Applicable."

9. INDEMNIFICATION; LIMITATION OF LIABILITY

9.1 Indemnification by Contractor. To the extent permitted by NMSA 1978 § 56-7-1, Contractor shall indemnify and hold harmless Owner and its officers, employees, and agents against liability, claims, damages, losses, and expenses only to the extent caused by or arising out of the acts or omissions of Contractor or its officers, employees, or agents in performing the Work. This clause does not require Contractor to indemnify, insure, or defend Owner for liability caused in whole or in part by Owner's own negligence, acts, or omissions.

9.2 Limitation of Liability. To the extent permitted by applicable law, the aggregate liability of either Party for contract damages shall not exceed the Contract Price. This limit does not apply to bodily injury, property damage, intentional misconduct, or an indemnity obligation permitted by § 56-7-1.

9.3 Consequential Damages. Subject to applicable law and the exceptions in Section 9.2, neither Party shall be liable to the other for consequential damages arising from a breach of this Agreement, except for agreed liquidated damages under Section 3.3.

10. DEFAULT; SUSPENSION; TERMINATION

10.1 Contractor Default. Any of the following constitutes a Contractor event of default:
(a) failure to materially comply with the Contract Documents or Applicable Law;
(b) failure to prosecute the Work diligently;
(c) failure to pay Subcontractors or suppliers when due;
(d) abandonment of the Work without authorization;
(e) falsification of records or lien waivers.

10.2 Notice and Cure. Owner shall give Contractor written notice specifying the default. Contractor shall cure within seven (7) days (or as otherwise stated). If Contractor fails to cure within such period, Owner may, without prejudice to other remedies, (i) supplement or take over the Work and deduct the cost, or (ii) terminate for cause.

10.3 Suspension by Owner. Owner may suspend the Work for convenience upon forty-eight (48) hours’ notice. Contractor shall resume promptly upon notice to proceed and shall be equitably adjusted for cost and time.

10.4 Termination for Convenience. Owner may terminate this Agreement for convenience upon seven (7) days’ written notice. Contractor shall be paid (i) the portion of the Contract Price allocable to Work satisfactorily performed, plus (ii) reasonable demobilization costs, but in no event more than the Contract Price.

10.5 Contractor Right to Terminate. If Owner fails to pay undisputed amounts within thirty (30) days after due written notice, Contractor may suspend Work. If non-payment continues for an additional thirty (30) days, Contractor may terminate and recover amounts due plus reasonable demobilization costs.

11. DISPUTE RESOLUTION

11.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New Mexico, without regard to conflict-of-law rules.

11.2 Forum Selection. Subject to applicable jurisdiction and venue law, the Parties consent to suit in the New Mexico state courts located in [County] for an action arising out of this Agreement.

11.3 Optional Arbitration. At either Party’s election, any dispute exceeding $[250,000] in controversy shall be resolved by binding arbitration administered by the American Arbitration Association (“AAA”) under its Construction Industry Arbitration Rules then in effect; provided, however, that (i) the arbitrator(s) shall apply New Mexico substantive law, (ii) discovery shall be limited to the AAA Fast Track Procedures unless otherwise agreed, and (iii) the award shall be final and judgment may be entered thereon in any court of competent jurisdiction.

11.4 Injunctive Relief. Nothing in this Article 11 shall limit either Party's right to seek temporary or preliminary injunctive relief or specific performance in a court of competent jurisdiction.

12. GENERAL PROVISIONS

12.1 Independent Contractor. Contractor is an independent contractor and not an agent or employee of Owner.

12.2 Assignment. Neither Party may assign this Agreement without the prior written consent of the other, except Owner may assign to a lender as collateral.

12.3 Notices. All notices shall be in writing and deemed given when (i) delivered personally, (ii) sent by recognized overnight courier, or (iii) deposited in certified U.S. mail, return receipt requested, to the addresses first written above (or as updated by notice).

12.4 Severability. If any provision is held invalid, the remaining provisions shall remain in effect. The invalid provision shall be modified to the minimum extent necessary to render it valid.

12.5 Waiver. No waiver is effective unless in writing and signed by the waiving Party.

12.6 Entire Agreement. The Contract Documents constitute the entire agreement between the Parties and supersede all prior discussions. No amendment is binding unless in a writing signed by both Parties.

12.7 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts. The Parties may sign electronically to the extent permitted by applicable law.

12.8 Attorney Fees. The prevailing Party in any dispute shall be entitled to recover reasonable attorney fees, expert fees, and costs.

12.9 Headings. Headings are for convenience only and do not affect interpretation.

13. EXECUTION

IN WITNESS WHEREOF, the Parties have executed this Construction Services Agreement as of the Effective Date.

[ NOTARY ACKNOWLEDGMENT – Add if required ]

END OF DOCUMENT

Sources and References

• Current NMSA Chapter 57 — Prompt Payment Act (§§ 57-28-3, -5, -8): https://nmonesource.com/nmos/nmsa/en/4423/1/document.do
• Current NMSA Chapter 48 — Mechanics' and Materialmen's Liens (§§ 48-2-2.1 and 48-2-6): https://nmonesource.com/nmos/nmsa/en/item/4413/index.do
• Current NMSA Chapter 56 — Construction indemnity (§ 56-7-1): https://nmonesource.com/nmos/nmsa/en/4418/1/document.do